Asian manufacturing improves, Spain's deficit larger than expected

Manufacturing in Asia improved a little in December.

In Japan, the manufacturing sector returned to growth in December with the Markit/JMMA manufacturing PMI rising to 50.2 from 49.1 in November.

China's manufacturing sector shrank again in December but at a slower pace. HSBC's manufacturing PMI for China rose to 48.7 from 47.7 in November.

The debt crisis in Europe, though, continues to be a threat to the global economy. Reuters reports the latest development in Spain:

Spain's new government said on Friday that this year's budget deficit would be much larger than expected and announced a slew of surprise tax hikes and wage freezes that could drag the country back to the centre of the euro zone debt crisis.

In its first decrees since sweeping to victory in November, the centre-right government said the public deficit for 2011 would come in at 8 percent of gross domestic product, well above an official target of 6 percent.